Who pays the price for loyalty? The role of self-consciousness
| Published date | 18 August 2014 |
| DOI | https://doi.org/10.1108/JPBM-08-2013-0375 |
| Pages | 362-371 |
| Date | 18 August 2014 |
| Author | Sylvia Long Tolbert,Chiranjeev Kohli,Rajneesh Suri |
| Subject Matter | Marketing,Product management,Brand management/equity |
Pricing strategy & practice
Who pays the price for loyalty? The role of
self-consciousness
Sylvia Long Tolbert
Department of Marketing, John Hopkins University, Baltimore, Maryland, USA
Chiranjeev Kohli
Mihaylo College of Business and Economics, California State University, Fullerton, California, USA, and
Rajneesh Suri
LeBow College of Business, Drexel University, Philadelphia, Pennsylvania, USA
Abstract
Purpose – This paper aims to study the role of self-consciousness from the point of view of firm loyalty. Firms increasingly vie to gain, and
then maintain, loyal consumers. A firm’s assumption that such consumers will be willing to pay premium prices, however, contradicts
consumers’ rational motivations to seek low prices. This research suggests that consumers’ self-consciousness and the nature of their loyalty
toward a firm help resolve this apparent contradiction. The results show that when past purchases reflect an exclusive relationship with a
retailer, participants with high public self-consciousness valued relatively low-price offers, whereas those with high private self-consciousness
expressed high-value perceptions for higher priced offers. However, when past purchases were divided between retail partners,
self-consciousness showed no impact on value perceptions.
Design/methodology/approach – Firms increasingly vie to gain, and then maintain, loyal consumers. A firm’s assumption that such consumers
will be willing to pay premium prices, however, contradicts consumers’ rational motivations to seek low prices. This research suggests that
consumers’ self-consciousness and the nature of their loyalty toward a firm help resolve this apparent contradiction. The results show that when
past purchases reflect an exclusive relationship with a retailer, participants with high public self-consciousness valued relatively low-price offers,
whereas those with high private self-consciousness expressed high-value perceptions for higher priced offers. However, when past purchases were
divided between retail partners, self-consciousness showed no impact on value perceptions.
Findings – Analysis reveals that consumers’ evaluations and search behaviors are influenced by characteristics of the medium (retail vs e-tail), but this
effect is moderated by both gender and price knowledge. Females prefer a brick and mortar environment and are likely to seek information at such retailers
even when similar products are available online. However, males evaluate online offers better than identical store offers and are less inclined to engage
in channel transition. Finally, evaluations of online offers are positively related to price knowledge, whereas a reverse pattern of results is obtained for retail offers.
Originality/value – The findings shed light on how consumers evaluate identical online vs retail price offers, and their associated search intentions.
These findings have practical implications for merchants who adopt a dual presence.
Keywords Consumer loyalty, Price perceptions, Self-consciousness
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this issue.
In today’s business environment with tough competition,
rising operational costs and declining profits, retailers find
themselves under constant pressure to capture a portion of
tightly held consumer dollars. Consequently, for retailers, now
more than ever before, consumer loyalty is a key focus of their
business strategy. A belief that loyal consumers are less
price-sensitive is what makes maintaining consumer loyalty
particularly appealing (Dowling and Uncles, 1997;Harris and
Goode, 2004).
Although such positive outcomes of loyalty for a retailer are
clear, for a long-term relationship to exist, both the retailer and
the consumer must benefit. From consumers’ perspective, there
is an expectation that they will prefer lower prices for identical
goods. This conflicts, however, with retailers’ desire for charging
relatively high prices from their loyal consumers. Therefore, a
meaningful research issue is to understand why certain loyal
consumers might pay high prices for comparable products at a
retailer. Specifically, what characteristics of loyal consumers
might lead to differences in response to prices offered by a
retailer?
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
23/4/5 (2014) 362–371
© Emerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-08-2013-0375]
362
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